Investigation Launched into Chinese Biotech Subsidies by Trade Body

Key Takeaways

The International Trade Commission (ITC) will investigate Chinese state support in the biotechnology sector and its effects on U.S. companies.
The investigation will include the impact of revoking permanent normal trade relations with China and its implications for tariffs.
China’s biotech industry, while growing, still lags behind the U.S. and Europe, leading to competitive concerns in the global market.

Investigation into Chinese Biotechnology Support

The International Trade Commission (ITC) announced it will initiate investigations into Chinese state support in the biotechnology sector as part of two new fact-finding missions concerning the U.S.-China trade relationship. This action arises under Section 332 of the Tariff Act of 1930.

The first investigation will focus on the potential consequences of revoking permanent normal trade relations (PNTR) with China. If enacted, this move would strip China of most favored nation tariff rates and enable the U.S. to impose targeted tariffs on Chinese exports. Although the previous administration implemented country-specific reciprocal tariffs, these were overturned by the Supreme Court last week. The ITC aims to expedite this investigation, with a final report scheduled for late August.

The second investigation will delve into how Chinese state support, particularly in the biotechnology sector, affects U.S. companies. This includes scrutiny of subsidies offered for genomic sequencing, synthetic biology, and the manufacturing of pharmaceutical ingredients. The ITC anticipates completing this report early next year.

While Section 332 investigations generally do not yield formal policy recommendations, the findings may support companies in pursuing countervailing duties or antidumping cases, potentially resulting in tariffs against China.

China aims to become a global leader in biotechnology, as outlined in its first five-year plan for the bioeconomy released in 2022. This plan emphasizes advancements in areas such as bio-agriculture, biopharma, bio-manufacturing, and biosecurity, bolstered by targeted goals in genomics, hybrid crop breeding, and veterinary medicine.

Despite this ambition, analyses reveal that China’s biotechnology industry currently trails behind the U.S. and Europe. As of 2024, China commands roughly 5% of the global biotech market compared to 35% for the U.S. and 31% for Europe. To bridge this gap, the Chinese government is providing incentives to high-tech businesses, offering them favorable access to capital.

China’s biotech market is predominantly driven by healthcare, but agriculture represents about 10% of the total sector. The nation plays a crucial role in U.S. supply chains for biochemical compounds, claiming approximately 68% of the global amino acid market and 75% of the vitamins market.

U.S. feed industry representatives argue that state support in China gives the nation an unfair competitive advantage in global markets, leading to the displacement of competitors. A report from the Institute for Feed Education and Research found that Chinese companies were charging vitamin prices that were around 34% lower than those of international rivals.

The American Feed Industry Association has advocated for addressing these issues with various U.S. government officials, including members of Congress, the USDA, and the National Security Council. CEO Constance Cullman has been vocal about these concerns, signaling a proactive approach to mitigate competitive disadvantages in the biotechnology sector.

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